This article first appeared in The Edge Malaysia Weekly on December 26, 2022 - January 1, 2023

In the 1990s, Royal Dutch Shell made a decision to diversify its talent pool. Ensuring a sustainable supply of future talent notwithstanding, the oil and gas behemoth felt that diversity had an impact on organisational performance across geographies.

Back in Malaysia, Tan Sri Zarinah Anwar, a lawyer by training who was then heading the legal, human resources and corporate affairs division of the company, was tasked with rolling out these new policies.

In a sector largely dominated by men, the task at hand was no mean feat. There were hardly any women in senior management and getting women with the required skills was akin to looking for a needle in a haystack.

Zarinah says: “It is essential for boards to make a visible commitment to gender diversity with sustained action throughout the organisation. More than two decades ago, Shell had firmly established gender diversity as a critical business strategy, with targets set for employing women at senior levels and country chairmen were held accountable for meeting those targets. I recall we started with a target of 5% women in decision-making positions. Where there were no women to occupy certain positions, we recruited externally into the organisation.

“It was one of the first companies that implemented flexible working hours and work-from-home policies on a selective basis. These were not only beneficial for the women in the company but also for the men, especially those with young children or elderly family members to care for. This enabled us to retain valuable talents that we would otherwise have lost if we had not been flexible with them.

“We had to overhaul existing policies to do this and by the time I left, which was 22 years later, diversity, equity and inclusion was a mainstay.”

The experience of leading the change to fruition left a lasting impact on Zarinah, cementing a lifelong commitment to advancing the involvement of women in leadership, especially through her work with the 30% Club, a global campaign to get women on boards and in C-suites of public listed companies.

Established in 2015, the Malaysian chapter of the 30% Club is a voluntary movement to further the gender diversity target set by the Securities Commission Malaysia (SC) as envisaged in the Corporate Governance Blueprint 2011.

It is intended to be a business-led voluntary drive for change to improve the gender imbalance on boards, says Zarinah, a founding chair of the 30% Club. The other founder of the club is Tan Sri Jeffrey Cheah, while Datuk Abdul Aziz Abu Bakar and Anne Abraham are founding executives.

The blueprint was launched when Zarinah served as the chairman of SC from 2006 until her retirement in 2012. The five-year plan to establish a sustainable governance ecosystem included raising the participation of women on corporate boards from 8.2% to 30% by 2016. When SC issued the Malaysian Code on Corporate Governance (MCCG) in 2012, this goal was cemented to ensure a healthy talent pipeline.

At that time, women represented only 14% of the boards of the top 100 public-listed companies (PLC)and only 10.7% of all PLCs, she says.

Even though substantial research has shown that companies with diverse boards tend to perform better financially and help improve a company’s reputation and credibility, there continues to be significant pushback from some companies.

“Change is always a challenge; changing longstanding practices is very difficult. There were still a lot of people who felt, ‘Why do we need to prefer women over men?’

“[Gender diversity] is about making a conscious effort to open your eyes to assess and evaluate all the talent you have in your organisation. It is also a fact that by selecting from a broader pool of candidates that includes both genders, boards are better able to attract the best talent,” asserts Zarinah.

Despite the guidelines and structures in place, the number of women securing the top spots in PLCs remains small.

As of October 2022, women’s representation on the top 100 PLC boards in Malaysia stood at 29% and 188 PLCs have no women on their boards, according to SC’s Corporate Governance Monitor (CG Monitor) 2022 report.

However, 771 PLCs have at least one woman director on their boards after Bursa Malaysia amended its listing requirements in January this year, which came into effect on Sept 1, mandating at least one woman director on the board of PLCs with a market capitalisation of RM2 billion and above as of Dec 31, 2021. The remaining PLCs have until June 1 next year to comply.

The CG Monitor also found that 80% of the women who were appointed to boards in 2022 were designated as independent directors and the majority of these appointments were to boards of small-cap companies. Given the prevalence of family-owned companies in this segment of listed companies, SC notes that it is encouraging that the women directors appointed to the board are not related individuals but independent directors, which should further strengthen the effectiveness and leadership of these boards.

While Bursa Malaysia’s updated listing requirements have seen an immense uptick in the appointment of women, the battle is far from over, Zarinah says.

“I remember during one of the many roundtable sessions we held with PLC chairmen and CEOs, a chairman of a PLC whose board is made up of all men admitted he preferred that all the board members were his friends because they understood how he thought; so the board doesn’t spend too much time arguing and challenging each other.”

This is partly why the 30% Club does not believe in imposing quotas to boost women’s representation on boards, as it would defeat the purpose of sustainable change.

“Merely throwing a mix of people together does not guarantee high performance. It requires inclusive leadership — one that ensures all team members feel treated fairly and respectfully, are valued, have a sense of belonging and are confident and inspired. An inclusive mindset and a diverse workforce are an organisation’s greatest competitive strengths.

“However, unless we have targets; we can’t arrive at our destination. The MCCG does require all PLCs to have at least 30% women directors on their boards. If the composition is less than 30%, they must disclose what action they are taking to achieve the target. The MCCG also requires boards to review the participation of women in senior management to ensure a healthy talent pipeline. So, companies know what they need to do and this is monitored by SC,” she says.

On its part, the 30% Club — which works based on volunteerism — conducts active engagement campaigns, training and advocacy to drive change with strategic partners such as ICDM and LeadWomen (founded by Abraham). 

In the early days of the movement, she says, PLCs often complained about the lack of qualified women to appoint to boards. She advises corporations to compile a board composition matrix to see how they are doing in the various dimensions of diversity and identify the gaps.

Once that is done, it is incumbent on corporate leaders to make explicit efforts to appoint women board members, who can then advocate for more women on the board and in senior management. “Senior women in the organisation also act as role models to inspire the younger ones,” says Zarinah.

It is also essential that the candidate list for recruitment or promotion includes women and that mentors are assigned to train them.

“Recognising that women are primary caregivers, more companies should introduce work-life practices like childcare facilities and flexible work arrangements. The pandemic has revolutionised the workplace and working from home is becoming commonplace. But that has led to its own set of problems alongside the benefits.

“[Companies] should also establish a Women’s Network. This is an internal forum for women to connect and support each other in career development and managing career obstacles as well as channelling issues to management,” she says.

The ICDM, for example, has set up a registry of competent women candidates who can be shortlisted and interviewed for board appointments. This database helped placed 26 women candidates on various boards this year, says Zarinah.

The 30% Club has since collaborated with various stakeholders — the government, regulators and private sector — and engaged the investor community to encourage investor activism. “So, institutional investors like the EPF [Employees Provident Fund] have been voting against the appointment of men where no women are on boards.

“We are seeing the results of our efforts; it’s slower than we’d like, but it’s progressing nonetheless. When we launched the 30% Club in 2015, the percentage of women on the boards of all PLCs was 10.7% but as of November this year, it had doubled to 21%. For the Top 100 PLCs, it was 14% in 2015 and 29% now, ” says Zarinah.

The only way to ensure that diversity is achieved is if boards make a powerful commitment to change.

“I must admit that the road to achieving our goal has not been easy. We still have not achieved our target. We have nonetheless seen significant progress. Advocacy work is never easy. We are driving change and that is always a challenge.

“There still is lingering doubt, a lack of recognition of the value of diversity, equity and inclusion, despite the many surveys and studies that show the correlation between gender diversity on boards and better corporate performance.

“For lasting change to occur, there must be a cultural change — moving beyond statistics to embrace and value differences. Boards must set the tone at the top and role model a culture of inclusiveness,” she says.

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